How to know if an “ecological” company is doing greenwashing

We are seeing more “green” and “all-natural” products on our shelves as consumers demand more sustainable choices.

But as companies come under increased pressure to meet their environmental, social and governance (ESG) goals, how do we know if some are distorting the truth?

When their enduring claims are false or exaggerated, they can be accused of “greenwashing”.

Essentially, this means that they are fooling consumers into believing that their product or service – or that the business itself is sustainable, when it is not.

Are there laws to protect consumers from greenwashing?

There is no law in Ireland that specifically challenges greenwashing.

However, there are more general protections for consumers, such as the Consumer Protection Act 2007 (CPA), as explained by Victor Timon, partner at law firm Lewis Silkin.

“Under the CPA, a seller must not make false statements about the goods or services he sells,” he said.

The CPA now also incorporates the EU Unfair Commercial Practices Directive as part of this legislation.

“Under the directive, a trade practice is unfair if it is misleading and likely to distort your purchasing decision,” noted Mr. Timon.

The Sale of Goods and Provision of Services Act 1980 also includes an implicit term that the goods will match their description.

The Advertising Standards Authority in Ireland (ASAI) also sets rules and makes decisions regarding false or misleading advertising.

However, Mr Timon stressed that unlike his UK counterpart, he does not have the power to enforce these decisions.

What are the penalties for companies that practice greenwashing?

The Competition and Consumer Protection Commission (CCPC) is responsible for overseeing consumer protection law in Ireland.

Mr. Timon said the CCPC can issue notices of compliance, seek court restraining orders against traders to prevent certain practices, or ultimately sue a trader in court and ask the judge to enforce a fine or even jail time in some cases.

However, the CCPC does not intervene in individual cases between traders and consumers, which, according to Mr. Timon, must be pursued by the consumer in court.

“The penalties provided by the CPA for summary judgments (lower courts) can be up to € 3,000 or a prison sentence of six months, or both,” said Mr. Timon.

“Indictment convictions (higher courts) can go up to € 60,000 or up to 18 months in prison, or both,” he added.

Which companies have been accused of greenwashing?

One of the most discussed cases is the Volkswagen emissions scandal.

In 2015, the United States Environmental Protection Agency discovered that many Volkswagen cars sold in the United States were equipped with a “neutralization device”.

Mr Timon explained that it is basically software in diesel engines that can detect when they are being tested and then modify the performance to improve the results.

“Volkswagen was making a big push to sell diesel cars in the United States at the time.

“He later admitted to the offense which also spilled over to car sales in Europe – and paid billions of dollars in compensation and fines,” he said.

Separately, in 2020, the UK’s Advertising Standards Authority (ASA) confirmed a complaint about an advertisement from Ryanair, which claimed the airline had the lowest carbon emissions in Europe.

“Ryanair has the lowest carbon emissions of any major airline – 66g of CO2 for every passenger-kilometer flown,” the advertisement states.

However, Mr Timon explained that the comparison with other “major airlines” only included four others – and there is no industry definition of what qualifies as a “major airline”. “.

“Maybe the nail in the coffin was that the numbers were based on efficiency rankings from 2011 – of little value for a rationale claim in 2019,” he said.

More generally, at the end of 2020, the European Commission and national consumer protection authorities conducted a scan of websites in Member States specifically targeting greenwashing.

Mr Timon said that in more than half of the cases, the trader failed to provide enough information to consumers to judge the accuracy of the claim.

“In 37% of the cases, the claim included vague and general statements such as ‘conscious’, ‘environmentally friendly’ and ‘sustainable’, which were intended to give consumers the unfounded impression that a product had no product. negative impact on the environment, “explained Mr. Timon.

He said that in 59% of cases, the trader failed to provide readily available evidence to substantiate his claim.

In their overall assessment, they believed that in 42% of cases the claims could be false or misleading – and therefore could potentially constitute an unfair trade practice under the Unfair Commercial Practices Directive.

Have Irish companies been fined after the EU sweep last year?

Three Irish traders have been approached by the Competition and Consumer Protection Agency over their green claims following the EU-wide sweep last year.

However, no sanction was pronounced.

A spokesperson for the CCPC said that in all three cases, the companies engaged with the CCPC and provided the additional information requested.

As a result, companies have taken a number of actions.

These included changes to their websites and the removal of errors relating to product details.

They have also modified their websites to provide clarification and “additional justification” for the environmental claims.

A spokesperson for the CCPC expressed satisfaction with the measures taken by traders and did not consider it necessary to take coercive measures.

The CCPC did not provide the names of the companies in question.

“Due to the nature of the enforcement role of the CCPC and the ongoing market surveillance in this area, we are unable to provide further details regarding the traders in question at this time,” said the spokesperson.

The spokesperson added that the CCPC participates “regularly” in the European scans of the “Consumer Protection Cooperation Network” (CPC network), which are a set of market surveillance checks carried out by the CPC network through the ‘Europe.

How to identify companies that practice greenwashing?

If you are unsure of the authenticity of a company’s or brand’s “green claims”, a spokesperson for the Competition and Consumer Protection Commission suggests that you follow a number of guidelines. ‘steps before buying.

1 Look for proof of claims

If you’re not sure about a brand’s “green claims”, do a quick research online or via social media to find out more.

Beware of companies with vague or superficial references to sustainability.

Most genuine brands will want to share the details of their ethical and sustainable approach to business. Instead, look for brands with sections of their website or social media pages dedicated to showcasing their ‘green certificates’.

2 Find the parent company

While a particular brand or product may prove to be genuine in terms of ‘green claims’, it is important to look at the big picture, including any parent company that it may be a part of or be affiliated with.

Look up the parent company’s green credentials and take a look at the overall sustainability lifecycle.

For example, a particular brand may use 90% recycled packaging material, but what about other processes in the broader business group, such as manufacturing, logistics or sourcing materials?

3 Don’t judge a brand by its packaging

Beware of vague terms such as “green” or “all natural”, as well as “green” images that can be used to present the product or brand as sustainable or ethical.

Don’t judge a brand by its packaging alone.

Be sure to read the ingredient list and check labels carefully before purchasing to make sure the claims are genuine.

4 false certifications

Watch out for fake “approved by” seals or institutional standards marks that may not even exist.

If you are unsure of a seal of certification, do some quick research to learn more before you buy.

Instead, look for approved seals such as the EU Ecolabel, EU Organic Logo, Fair Trade Certification, and Rainforest Alliance Certification.

What should I do if I suspect a company is greenwashing?

The SPCC continuously monitors compliance with consumer protection law.

Their enforcement work is based on the information they get through various channels including: contacts with their consumer helpline, research and market monitoring.

“If a consumer thinks he has been misled about ‘green claims’, we ask them to contact us so that we can help them resolve their issue,” a CCPC spokesperson said.

You can call the helpline on 01 402 5555 or connect to ccpc.ie for more information.

Are tougher laws protecting consumers?

With the increasing emphasis on sustainability, it is inevitable that specific legislation dealing with green labeling is on the way.

In December 2019, the European Commission published the European Green Deal to tackle environmental challenges.

Mr Timon said this would result in an EU regulation requiring manufacturers to be able to prove any claims they make about sustainability, environmental friendliness or other ‘green’ attributes of their products.

“The new regulation is expected this year – it will probably come into force two years later,” he said.

This is expected to be followed by specific legislation to allow consumers to pursue claims of greenwashing.

Meanwhile, on general consumer rights, Mr. Timon said the ‘New Deal for Consumers’ released by the EU in 2018 contains GDPR-like fines for consumer law violations.

“Regulators like the CCPC will have the right to make test purchases and assess products against a manufacturer’s or seller’s claims about their performance – including any green benchmarks,” he said. .


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